Venezuela bank strike call worsens strike turmoil
09 Jan 2003 01:29 www.alertnet.org
(Adds currency reference, paragraphs 2,6, traders', analysts' comments, paragraphs 15-17) By Pascal Fletcher
CARACAS, Venezuela, Jan 8 (Reuters) - Venezuelan bank workers on Wednesday called a 48-hour shutdown of banking services this week, escalating a five-week opposition strike that has already crippled the country's vital oil exports.
The bank stoppage call spooked Venezuela's currency market, sending the local bolivar tumbling against the U.S. dollar.
Union leaders said the action by employees at private and state banks across the South American nation would halt services to the public on Thursday and Friday.
"We are calling for a complete banking stoppage," Jose Elias Torres, president of the bank workers' union federation Fetrabanca, told a news conference in Caracas.
Fetrabanca called the work stoppage in support of the grueling strike launched by opposition leaders on Dec. 2 to press leftist President Hugo Chavez to resign and hold early elections. The ongoing shutdown has crippled oil output and shipments by the world's No. 5 petroleum exporter.
The Venezuelan Central Bank's bolivar reference rate <VEBFIX=> against the U.S. dollar closed 5.7 percent down at 1,507/1,510.50 bolivars. The local currency's interbank rate <VEB=> <VEB2=> slid by nearly 10 percent against the U.S. greenback to an average low of 1,585 bolivars, traders said.
As the opposition's economic offensive against the populist president increased, so too did tension on the streets.
National Guard troops fired tear gas on Wednesday to keep back stone-throwing Chavez supporters who besieged the National Electoral Council in Caracas, where opposition leaders were holding a news conference. No injuries were reported.
The pro-Chavez demonstrators chanted "Chavez is not resigning" and "The banks belong to the people."
LINES AT BANKS
The 48-hour banking strike heralded fresh disruptions for the Venezuelan public, already coping with a scarcity of gasoline and shortages of some food products caused by the general strike. Private banks had already been restricting their daily services to three hours a day during the strike.
After the stoppage was announced, lines formed at banks in Caracas as clients rushed to withdraw cash before the weekend.
"It's madness. People have needs and in those two days (Thursday and Friday), they might have to get cash," said 30-year-old administrative assistant Mauro Rodriguez.
The opposition has set its sights on a Feb. 2 referendum scheduled by electoral authorities to vote on whether Chavez should resign. But the poll is nonbinding, and the president, who was elected in 1998 and whose term ends in early 2007, says the proposed election is unconstitutional.
More than five weeks into the strike, Venezuela's economy is reeling from the oil shutdown. Oil sales account for half of government revenues and 80 percent of all export revenues.
Local currency traders said the bank strike call, combined with the deteriorating economic situation, was unnerving local banks, companies and savers. "That frightened a lot of people who went out and converted their bolivars into dollars, in case the situation gets worse," one trader said.
Analysts questioned whether the government, losing millions of dollars every day through the oil strike, would be able to meet future domestic and external debt payments.
"I see things going down, down, down, down," Michael Gavin, Head of Latin American Economic Research for UBS Warburg, told Reuters. "I think it's tough to see how they get through the first quarter," he added.
CHAVEZ FIGHTING BACK
But local experts said that beyond the nuisance to the public, the overall economic impact of the two-day bank stoppage would be limited. "It's more a symbolic shout than anything else," one, who asked not to be named, told Reuters.
Former paratrooper Chavez, who survived a coup in April and refuses to quit, has vowed to beat the strike and act against any attempt by his foes to close down the banking sector.
Venezuela's Central Bank said it would continue its operations but it was not clear whether the inter-bank foreign exchange market would be running on Thursday and Friday.
Stepping up their economic war of attrition against Chavez's government, opposition leaders have also called on Venezuelans to stop paying taxes. As a result of the strike, the government is reducing by half its original 2003 growth forecast of 2.5 percent to 3.5 percent. It has said it will announce tough belt-tightening measures.
And Chavez is fighting back, sacking striking oil executives in the state oil giant PDVSA and sending troops and loyal personnel to re-start refineries and export terminals.
The government insists strike-hit oil operations are being restored to normal. The strikers say the shutdown is holding.
The oil industry disruption has hit shipments to the United States, which normally obtains more than 13 percent of its crude imports from Venezuela. A senior U.S. official said on Tuesday the United States would buy its oil elsewhere.
Many major industries and shops remain closed and many private schools and universities are not starting classes.